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PARLIAMENTARY DEBATES HOUSE OF COMMONS OFFICIAL REPORT GENERAL COMMITTEES Public Bill Committee FINANCE (NO. 4) BILL (Except clauses 1, 4, 8, 189 and 209, schedules 1, 23, and 33 and certain new clauses and new schedules) Third Sitting Thursday 26 April 2012 (Morning) CONTENTS CLAUSE 3 under consideration when the Committee adjourned till this day at One o’clock. PUBLISHED BY AUTHORITY OF THE HOUSE OF COMMONS LONDON – THE STATIONERY OFFICE LIMITED £4·00 PBC (Bill 325) 2010 - 2012 Members who wish to have copies of the Official Report of Proceedings in General Committees sent to them are requested to give notice to that effect at the Vote Office. No proofs can be supplied. Corrigenda slips may be published with Bound Volume editions. Corrigenda that Members suggest should be clearly marked in a copy of the report—not telephoned—and must be received in the Editor’s Room, House of Commons, not later than Monday 30 April 2012 STRICT ADHERENCE TO THIS ARRANGEMENT WILL GREATLY FACILITATE THE PROMPT PUBLICATION OF THE BOUND VOLUMES OF PROCEEDINGS IN GENERAL COMMITTEES © Parliamentary Copyright House of Commons 2012 This publication may be reproduced under the terms of the Parliamentary Click-Use Licence, available online through The National Archives website at www.nationalarchives.gov.uk/information-management/our-services/parliamentary-licence-information.htm Enquiries to The National Archives, Kew, Richmond, Surrey TW9 4DU; e-mail: [email protected] 73 Public Bill Committee26 APRIL 2012 Finance (No. 4) Bill 74 The Committee consisted of the following Members: Chairs: †MR PETER BONE,MR JIM HOOD † Baldwin, Harriett (West Worcestershire) (Con) † Malhotra, Seema (Feltham and Heston) (Lab/Co- † Barclay, Stephen (North East Cambridgeshire) (Con) op) † Blenkinsop, Tom (Middlesbrough South and East Mann, John (Bassetlaw) (Lab) Cleveland) (Lab) † Mearns, Ian (Gateshead) (Lab) Burley, Mr Aidan (Cannock Chase) (Con) † Mills, Nigel (Amber Valley) (Con) † Elphicke, Charlie (Dover) (Con) † Morrice, Graeme (Livingston) (Lab) † Garnier, Mark (Wyre Forest) (Con) † Morris, Grahame M. (Easington) (Lab) † Gauke, Mr David (Exchequer Secretary to the † Pugh, John (Southport) (LD) Treasury) † Rees-Mogg, Jacob (North East Somerset) (Con) † Gilmore, Sheila (Edinburgh East) (Lab) † Reeves, Rachel (Leeds West) (Lab) † Gyimah, Mr Sam (East Surrey) (Con) † Smith, Miss Chloe (Economic Secretary to the † Hamilton, Fabian (Leeds North East) (Lab) Treasury) † Hands, Greg (Chelsea and Fulham) (Con) † Smith, Owen (Pontypridd) (Lab) † Harrington, Richard (Watford) (Con) † Swales, Ian (Redcar) (LD) † Hilling, Julie (Bolton West) (Lab) Syms, Mr Robert (Poole) (Con) † Hoban, Mr Mark (Financial Secretary to the † Williams, Stephen (Bristol West) (LD) Treasury) † Williamson, Gavin (South Staffordshire) (Con) † Jamieson, Cathy (Kilmarnock and Loudoun) (Lab/ Wilson, Sammy (East Antrim) (DUP) Co-op) † Kirby, Simon (Brighton, Kemptown) (Con) James Rhys, Simon Patrick, Committee Clerks † Lavery, Ian (Wansbeck) (Lab) † McKenzie, Mr Iain (Inverclyde) (Lab) † attended the Committee 75 Public Bill CommitteeHOUSE OF COMMONS Finance (No. 4) Bill 76 proceedings, my hon. Friend the Member for Pontypridd Public Bill Committee highlighted several case studies, and it is right that we should look at the policy’s impact on poorer, working Thursday 26 April 2012 families in receipt of housing and council tax benefits. As he said, they will be just £33 a year better off from (Morning) the tax threshold increase because, as their income goes up, their benefit entitlement goes down. [MR PETER BONE in the Chair] Graeme Morrice (Livingston) (Lab): To go back to Finance (No. 4) Bill my hon. Friend’s comment about VAT, it seems that earlier this week Government Members were disputing (Except clauses 1, 4, 8, 189 and 209, schedules 1, 23 the figures that we had been given. For example, my and 33 and certain new clauses and new schedules) hon. Friend the Member for Easingston mentioned that an average couple with children would lose £450 a year. Clause 3 Does he accept that the official figures were confirmed by the Minister, fin response to a question asked by my PERSONAL ALLOWANCE FOR 2012-13 FOR THOSE AGED hon. Friend the Member for Gedling (Vernon Coaker), UNDER 65 recorded in Hansard on 5 July 2010? Amendment proposed (24 April): 10, in clause 3, page 2, line 33, at end add— Grahame M. Morris: I believe that it was the hon. ‘(3) The Chancellor of the Exchequer shall review the overall Member for Bristol West who queried the figures that impact on families of this section compared with other measures we were quoting. It is important that we set the record the Government is introducing and place a copy of the review in straight. They are official Treasury figures. the Library of the House of Commons.’—(Owen Smith.) 9am Stephen Williams (Bristol West) (LD): The hon. Question again proposed, That the amendment be Gentleman mentioned my earlier intervention on him, I made. think. The £450 may be true on average across all families in the UK, but the specific point that he and his The Chair: I remind the Committee that we are colleagues were making was that the poorest in society, discussing amendment 10, with which we are discussing particularly people in his own constituency, would be clause stand part. worse off by £450 as a result of the rise in VAT, which, We shall finish this morning’s sitting no later than from memory, would mean that they had spent £18,000 10.25 am, which will enable members of the Committee on standard-rated, VATable items. I challenged him to to get to the Chamber in time for proceedings there. say how many people in his constituency might actually spend £18,000 on VAT standard-rated items. I think he Grahame M. Morris (Easington) (Lab): I rise in support said, “Very few,” so I do not think I was wrong. of amendment 10. In view of the figures published yesterday, it is worth while focusing on the impact on Grahame M. Morris: I refer the hon. Gentleman to ordinary families of the double-dip recession, which the reply quoted by my hon. Friend the Member for has now been confirmed officially. While Opposition Livingston. Members welcome the increase in the general income tax personal allowance—the basic rate, that is—when people first start paying tax, it is important that the Ian Swales (Redcar) (LD): Will the hon. Gentleman overall impact of all policies on low and average income give way? earners is assessed, because the increase in the personal allowance is only part of a package of measures. Grahame M. Morris: If the hon. Gentleman will The question that must be asked is who will be better allow me to respond to the intervention of the hon. off as a result of the changes made in the Budget by the Member for Bristol West, I will then give way. Chancellor? Our amendment is reasoned. Indeed, it calls on the Government to report back to the House on My perception is that ordinary families, such as those the overall impact of their policy on those whom they in Easington, spend the vast bulk of their income on claim will be better off as a result of the increase in the VATable items; they do not save it, buy Ferraris or personal allowance. The long-term objective of raising holiday homes, or put it into pension pots. The figure I the basic personal allowance to £10,000 during the quoted is from the Minister’s response to a parliamentary parliamentary year is to be applauded. In a previous question. debate, the hon. Member for Watford asked whether Opposition Members supported it. We certainly do, but Ian Swales: I am sure that the hon. Gentleman is the measure must be seen in context alongside the aware that there is no standard-rate VAT on housing slash-and-burn policies of other Departments, most and public transport costs, food, children’s clothes, fares, notably the Department for Work and Pensions. insurance, TV, gambling, the lottery, energy or utilities. According to independent experts, the changes coming For me and my household, that is the bulk of our into effect in April will leave a family with children spending. Is he aware that the Office for National worse off by an average of £511 a year. That is on top of Statistics says that someone would have to be in the top the VAT rise, which I remind the Committee will cost an 20% of earners to spend £18,000 on VAT standard-rated average couple with children £450 a year. In earlier items? 77 Public Bill Committee26 APRIL 2012 Finance (No. 4) Bill 78 Grahame M. Morris: That amount was in the Treasury’s As part of that assessment, we need to assess the overall reply to a question from my hon. Friend the Member impact of the whole package of measures net, as my for Gedling, and it is the increase in an average family’s hon. Friend the Member for Feltham and Heston said. expenditure as a consequence of the VAT increase. If Let us not forget that the Chancellor has chosen to keep the hon. Member for Redcar queries the response, VAT at 20%—clearly a regressive tax that hurts the perhaps he should take it up with the Minister. I simply poor most. He has also chosen to continue wage freezes quoted the figure given by the Treasury. throughout the public sector. He has chosen to go down the route of regional pay, an issue that I sought to Ian Lavery (Wansbeck) (Lab): Is my hon. Friend as highlight in yesterday’s debate in Westminster Hall. surprised as me by the two interventions from Liberal Areas such as mine would effectively be turned into Democrat Members, who stood at the election with the low-pay ghettoes.